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Issues:
1. Disallowance of deduction under s. 40(a)(iia) of the Finance Act, 1983. Analysis: The appeal pertains to a private limited company engaged in the manufacturing and sale of products, including deriving income from various sources. The primary issue raised in the appeal is the disallowance of a deduction amounting to Rs. 1,55,820 under s. 40(a)(iia) of the Finance Act, 1983. The Assessing Officer (AO) disallowed the claim, contending that the deduction was prohibited by the said section. Upon the first appeal, the assessee argued that the deduction should be allowed based on a Supreme Court decision and challenged the CIT(A)'s decision. However, the CIT(A) upheld the disallowance, stating that the wealth-tax in question, paid under s. 40 of the Finance Act, 1983, was covered by s. 40(a)(iia) of the Income Tax Act, making it ineligible for deduction. Subsequently, the assessee appealed to the Tribunal, where the authorized representative contended that the provisions of s. 40 of the Finance Act, 1983, were not correctly interpreted by the AO and CIT(A). The representative relied on legal precedents to support the claim for deduction. After considering the arguments from both sides, the Tribunal referred to the Supreme Court's decision in a relevant case and analyzed the Explanation to s. 40(a)(iia). The Tribunal concluded that the wealth-tax paid by the assessee, pertaining to specific assets as per s. 40 of the Finance Act, 1983, was admissible for deduction. Therefore, the Tribunal directed the AO to allow the deduction of Rs. 1,55,820. Additionally, it was noted that the other grounds raised by the assessee were not pursued, leading to a partial allowance of the appeal. In summary, the Tribunal's decision favored the assessee by allowing the deduction under s. 40(a)(iia) of the Finance Act, 1983, based on the specific circumstances and legal interpretations presented during the proceedings.
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